Real estate investment can be challenging, especially when you first learn about hard money. Hard money loans are offered by private lenders rather than the conventional banks or financial institutions. However, hard money lending is surrounded by several myths that sometimes discourage borrowers from opting for hard money loans to finance their investments. Monroe Funding Corporation knows that people need to get the facts about hard money lending in Miami.
1. Documents don’t matter
It should be one of the most common misconceptions about hard money loans. Most people assume that hard money loans don’t require reports. On the contrary, these loans require documents, but they are fewer than those required during application for conventional loans. Hard money lenders require documents such as financial statements, credit reports, and tax returns.
2. Only the desperate seek hard money loans
Most people believe that hard money loans are for desperate borrowers with bad credit scores. It is far from the truth because most borrowers are smart enough to work with private lenders as opposed to conventional money lenders. Besides, hard money loans have similar requirements with conventional loans; thus, they cannot be for desperate borrowers.
3. Hard money loans are more expensive than conventional loans
Hard money loans are not as expensive as people think. These loans are flexible; thus, your loan gets approved within a short time. The lenders understand that you need the funds for investment so that they won’t delay the loan application. The interest rate on hard money loans is higher than conventional loans, but the former are short-term loans.
4. Hard money loans are available only for commercial properties
Commercial property owners have access to hard money loans. However, lenders offer loans to single families who want to buy residential homes. You can also borrow money to buy another house.
Hard money loans have made it easier for investors to access funds quickly than before. You don’t have to worry about the loans now that you know the truth. You should not shy away from hard money loans.